THQ posts wider-than-expected loss, shares fall

By Gabriel Madway

SAN FRANCISCO (Reuters) - THQ Inc (THQI.O) reported a wider-than-expected quarterly loss, but the struggling video game publisher said it hopes to return to profitability in the current fiscal year after overhauling its cost structure.

Its shares stood largely unchanged in light after-hours trading following a drop of 4 percent shortly after its results were released.

The creator of franchises such as "Saints Row" and "WWE Smackdown vs Raw," THQ recently laid off 600 employees, or 24 percent of its workforce, and removed $220 million in costs in an effort to right-size its operations.

"They've done pretty dramatic cost-cutting... They've eliminated a lot of the marginal products," said MKM Partners analyst Eric Handler. "But it comes down to the games, and are the games going to drive revenue."

On the conference call, Chief Executive Brian Farrell called fiscal 2009 a "disappointing year" with sales falling significantly. He is looking to major upcoming releases, including "UFC" and "Red Faction: Guerrilla", to help the company turn a profit in fiscal 2010.

THQ reported a net loss of $96.9 million, or $1.44 a share, in its fiscal fourth quarter ended March 31, versus a year-ago net loss of $34.5 million, or 52 cents a share.

Excluding items such as severance expense and impairment charges, THQ posted a loss of 54 cents a share, much wider than the 32 cent average analyst forecast, according to Reuters Estimates.

Non-GAAP revenue slid 29 percent to $154.3 million, but it beat Wall Street's estimate of $145.2 million.